How to Eat Cheaply in Iceland (2026)

Let us get the hard truth out of the way first: Iceland is expensive. A sit-down dinner for two in Reykjavik with a glass of wine can easily run ISK 20,000-30,000 (EUR 130-195). That is a lot of money for a Tuesday night meal. But here is the thing -- it does not have to be that way. With a bit of strategy, you can eat genuinely well in Iceland without emptying your wallet. This guide covers the tactics that actually work.

The Budget Mindset

The single most important shift is this: eat your main meal at lunch. Many of Reykjavik's better restaurants offer lunch specials between 11:30 and 14:00 that are dramatically cheaper than their evening menus -- often ISK 2,000-3,500 (EUR 13-23) for the same quality of cooking. Dinner at these same places will cost double or triple.

Your second weapon is the hot dog. This is not a joke. Baejarins Beztu Pylsur has been serving lamb-and-pork hot dogs from a kiosk on Tryggvagata since 1937, and at ISK 590 (EUR 3.80) for one with everything, it remains one of the best meals per krona in the country. Order "ein med ollu" and you will understand why there is always a queue.

The Best Budget Restaurants

Icelandic Street Food is the closest thing Reykjavik has to a budget lifeline. Their lamb soup comes in a bread bowl for around ISK 2,290 (EUR 15), and it is refillable -- eat as much as you want. The fish stew gets the same treatment. For a filling, authentically Icelandic meal at a price that will not make you wince, this is the first place to go.

Noodle Station does one thing and does it well: large bowls of Thai-inspired noodle soup for ISK 1,890-2,290 (EUR 12-15). It is simple, warming, generous, and exactly what you want after a day of walking in Reykjavik wind.

Hlolli (the locals' answer to Subway, except far better) serves loaded sub sandwiches from around ISK 1,500-2,200 (EUR 10-14). The portions are large enough that one sandwich can genuinely serve as a meal for two lighter eaters.

Cafe Babalu on Skolavordustigur is a cosy, slightly bohemian cafe with soups, sandwiches, and cakes at reasonable prices. A soup-and-bread lunch runs about ISK 2,200 (EUR 14). It is also one of the more pleasant places to sit and warm up between sightseeing.

Kaffi Ku near the harbour offers decent burgers and casual fare at prices that are tolerable by Reykjavik standards -- mains from ISK 2,500-3,500 (EUR 16-23).

Outside Reykjavik, Taste Akureyri in north Iceland provides good value with a varied menu at prices slightly below the capital.

Grocery Store Strategy

The supermarket is your best friend. Bonus (the bright yellow signs with the pig logo) is the cheapest chain. Kronan is a close second. Stock up on skyr (Iceland's thick, protein-rich dairy product -- far cheaper than any restaurant breakfast), bread, cheese, deli meats, and fruit. A full day of supermarket meals costs ISK 3,000-5,000 (EUR 20-32) per person, compared to ISK 10,000-15,000 (EUR 65-97) eating out for every meal.

Practical tip: if your accommodation has a kitchen, use it. Buy fresh fish at Hlemmur Matholl or a local fishmonger and cook it yourself -- you will eat better than most tourists and spend a fraction of what they do.

Gas Station Food

This sounds desperate. It is not. Icelandic gas stations -- particularly N1 and Olis -- serve surprisingly decent hot food: pylsur (hot dogs), burgers, soup, and sandwiches. On a road trip around the Ring Road, where restaurant options are thin, a gas station lunch of hot dogs and soup for ISK 1,500-2,500 (EUR 10-16) per person is a perfectly sensible move.

Happy Hour

Alcohol is where Iceland's prices truly become punishing. A beer in a bar typically costs ISK 1,400-1,800 (EUR 9-12). But nearly every bar in Reykjavik runs a happy hour -- usually between 15:00 and 18:00 -- where beer drops to ISK 800-1,000 (EUR 5-6.50). The app "Appy Hour" shows you which bars are running deals right now. Use it.

A Budget Food Tour

If you want to sample Reykjavik's food scene with a local guide and hit several of these spots in one go, food tours starting from ISK 12,000 are a surprisingly efficient way to do it. You will taste enough across multiple stops that it effectively replaces a meal, and you will discover places you would have walked past on your own.

Sample Budget Day

Here is what a realistic budget food day looks like in Reykjavik:

• Breakfast: Skyr and bread from Bonus -- ISK 500 (EUR 3.25)
• Lunch: Lamb soup at Icelandic Street Food -- ISK 2,290 (EUR 15)
• Afternoon snack: Hot dog at Baejarins Beztu -- ISK 590 (EUR 3.80)
• Dinner: Noodle soup at Noodle Station -- ISK 2,290 (EUR 15)

Total: ISK 5,670 (EUR 37) -- and you have eaten well.

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Final Tips

Iceland does not have to break you financially. The key principles are simple: cook when you can, eat your big meal at lunch, embrace the hot dog, and save restaurants for the experiences that are genuinely worth the splurge. A Dill tasting menu or a langoustine at Messinn -- those are worth paying for. A mediocre burger at a tourist trap on Laugavegur for ISK 4,000 is not.

The prices in this guide reflect early 2026. Iceland's costs tend to creep upward, but the strategies remain the same. Last updated: February 2026.